Investment climate
in 120 Chinese cities:
preliminary results
from a survey by NBS and World Bank
David Dollar, World Bank, May 2006
Six regions involved in investment
climate survey
Survey design
• Covers all provincial capitals plus largest
other cities in the province
• 100 firms from each of 116 cities, 200 firms
from mega-cities (Beijing, Tianjin, Shanghai,
Chongqing)
• Survey universe: for each city, top 10
manufacturing industries in terms of sales
• Divide firms with 10+ workers into top, middle,
and bottom third in terms of sales; randomly
choose from each group, 33, 33, and 34 firms,
respectively
Distribution of sample firms
by ownership
Majority state owned
8%
Domestic non-state
64%
Foreign invested
28%
Distribution of sample firms’
assets by ownership
Domestic non-state
41%
Majority state owned
32%
Foreign invested
27%
Rate of return on capital
22%
19%
7%
State-owned Private domestic
Foreign
enterprises
enterprises
enterprises
State enterprise share of
industry output
Southeast
Bohai cluster
Northeast
Southwest
Center
Northwest
0
10
20
30
40
50
Percent
60
70
80
Private rate of return by region
Southeast
Bohai cluster
Northeast
Southwest
Center
Northwest
0
5
10
15
20
25
Percent
30
35
40
Customs clearance (exports)
Southeast
Bohai cluster
Northeast
Southwest
Center
Northwest
0
2.5
5
Days
7.5
10
Output lost to power outages
Southeast
Bohai cluster
Northeast
Southwest
Center
Northwest
0
1
2
3
Percent
4
5
6
Days dealing with government
bureaucracy
Southeast
Bohai cluster
Northeast
Southwest
Center
Northwest
0
10
20
30
40
Days
50
60
70
80
Surplus labor
Southeast
Bohai cluster
Northeast
Southwest
Center
Northwest
0
1
2
3
Percent
4
5
Firms making informal payments to
secure bank loan
Southeast
Bohai cluster
Northeast
Southwest
Center
Northwest
0
2
4
6
Percent
8
10
Lagging regions: productivity gains from
achieving Southeast investment climate
Northeast
Southwest
Center
Northwest
0
60
80
Percent
100
Policy: city level
• Divest state enterprises
• Simplify business registration,
procedures, red tape
• Improve logistics (customs, transport
services)